Personnel outsourcing industry reaches critical point

According to the Gartner market research institute the outsourcing industry is once again considered to grow strongly in the current year. A total turnover of 134.7 billion Dollars in this sector which is expected by the end of this year would amount to a growth by 8.3 percent as compared to the previous year. However, the business process outsourcing sub-segment of human resources (HR BPO) is seen less optimistic by the Gartner experts and said to lose momentum in particular in the US.

In 2006 the HR BPO market will reach a critical point given that some outsourcing service providers are in a problematic profit situation and have to optimize their BPO portfolio. This will have consequences on the HR BPO market in 2007, especially in the United States”, says Robert Brown who is an expert with Gartner. Yet, with 24.6 billion Dollars in the current year the HR BPO segment will still contribute the biggest share to the total turnover of the outsourcing industry, even if this represents a growth by 4.7 percent which is quite moderate a figure as compared to that of the previous year. Not least because of these numbers Gartner expect the development of the HR sub-segment to have currently reached its peak.

The bad US performance is compensated for by the European BPO market the HR segment of which will grow by 6.5 percent this year. The prospects for growth are still considered to be quite promising in Europe. According to Gartner the most serious competitors of external HR BPO providers are still the internal employees of a company who are difficult to be replaced by BPO processes given that they represent the internal control over a company. GERMAN